rate of investment declines steadily among us corporates

Rate of Investment (Capex-to-Depreciation) declines steadily among US Corporates

A review of the Capex to Depreciation ratio since 2011 shows a steady decline in this key metric

We used the Economatica system to calculate the median capex to depreciation ratio for US publicly traded companies. The data clearly shows that the rate of investment by US companies has been declining steadily since 2011.

The highest peak in the period was achieved in the 4th quarter of 2012. The ratio climbed to a level of 164.5%. The lowest point observed in the 7 year period was in the 1st quarter of 2018, when the capex to depreciation ratio hit the low point of 119.7%. The second lowest point belongs to the 2nd quarter of 2018, 119.8%. While the metric rebounded slightly in the 3rd quarter of 2018 to 122.1%, it still remained relatively low and very close to the bottom range of values overall.

In the Economatica system, Capex is defined as Net PPE + Net Investments.

ratio capex depreciation

We break down the data to show the trends in individual sectors. The table below shows capex-to-depreciation by sectors, and all but three sectors experience declines in the metric.

The sector with the biggest drop in the rate of investment as measured by the capex to depreciation ratio is Mining, Quarrying, and Oil and Gas Extraction with a drop of 56% since 2011. The second largest drop belongs to Wholesale Trade, dropping 47% since 2011.

capex to depreciation

The Economatica system offers a range of sophisticated analytic tools and financial data on an easy to use online research platform that empowers asset managers, analysts, and other investment professionals who conduct fundamental and quantitative analysis. Ask us for a free 14-day trial today and learn how to make your own observations.

Subscribe to our newsletter and receive our
exclusive content
as soon as it comes out

RELATED STUDIES

Net Profit Margin Improves in 2018

Using the Economatica system we examined the year-end results for 2018 and found improvement in...

Learn more

March 14, 2019 | By Economatica

Equity Beta and Asset Beta by Sector

Using the Economatica system, we explore capital structure, equity beta, and asset beta across key...

Learn more

March 7, 2019 | By Economatica

Evolution of Enterprise Multiple of the S&P 500

Using the Economatica system we calculated the EV/EBITDA (ttm) multiple for key sectors in the...

Learn more

February 28, 2019 | By Economatica